Now Jen is on a mission to inspire and empower others through financial education so they too can enjoy the life they want to live. Jen shares her recipe for success, happiness and financial freedom via writing, blogging, speaking and coaching. As part of her commitment to community, Jen pledges her blogging profits as 0% microloans through Kiva.org to small businesses operated by working, impoverished women in developing countries.

Recently, I responded to several questions posed by Flexo and Tom from Consumerism Commentary. They created a 21 minute podcast of our conversation. Here is a sampling of the content:

how I used apprenticeship programs as an alternative to formal schooling, to land a job, and then to hire my own employees

my motivation for becoming financially independent

how we purchased our first home

my decision to delay parenting

the somewhat “unconventional” financial steps I took that lead my husband and I across the millionaire threshold

why after 17 years of homeownership, we decided to become renters

a few of the ways I am raising our daughter using important life lessons I’ve learned

I think Flexo and Tom do a great job with their podcasts — so much so that I am considering hiring Tom to edit and polish some podcast material for my blog. As part of my book’s research, I am interviewing other first generation, self-made millionaires who are under the age of 55. I am recording these conversations. My intention is to include a variety of these financial success case studies and profiles to illustrate various principles in my book. Before I commit to the expense of creating podcasts, I want to know: Do you listen to and enjoy podcasts or do you prefer that I share these stories in written blog post format?

[poll id=”2″]

Please take a second to respond to the poll above, then head on over to Consumerism Commentary to listen to the podcast. I’d appreciate your feedback about this podcast — and your experience with podcasts in general — in the comments section. (Note: Email subscribers and RSS feed readers, you will need to click through to my blog to do so.) Thanks!

In my last post, I suggested that financial success takes more than learning the how to of creating wealth. I challenged that our mindset often gets in the way of reaching our financial goals. I asked you to weigh in with your personal experiences. Thank you for your comments and emails – they will help me as I design the structure and content of my book.

As promised, I am following up by sharing several very specific factors that I attribute to my own personal finance success. In my opinion, there are three basic components that I think helped me to achieve my financial goals:

Being

Believing

Doing

Be:

Honest Take inventory of your finances. List your assets and all of your debts. Track your spending. Quit sweeping what you don’t want to acknowledge under the rug because until you face it head on, your finances are unlikely to change.

Compassionate Be as kind to yourself as you are to those you love most dearly. Stop the blame games and guilt trips. Your net worth will grow faster when you stop wasting time with negative energy.

Courageous Change takes courage. Despite what we’re often told, we learn more from our successes than we do our failures. (I will share some very interesting research on this soon!) Break down your big financial goals into small steps. Build upon each small success — momentum is everything!

Committed Are you committed to getting out of debt? Reaching financial independence? Do a gut check. You have to want it bad enough to do everything it takes to make it happen. There is no “try” in commitment. Do or don’t do — which will it be?

Focused Keep your eye on the prize while you enjoy life’s little pleasures along the way. Keep a journal or organize a support group to help you keep on track.

Consistent Practice makes perfect so consistently practice!

Resourceful Think outside of your box. Learn to let all judgements go when you brainstorm and solutions will expose themselves.

Likable Emotional intelligence and social skills lead to better outcomes. Likable people are more likely to be promoted, to sell more to their customers, to better manage and lead groups. Be likable and you’ll find others are more willing to help you reach your goals

Patient Unless you inherit a fortune or win the lottery, you won’t get rich overnight. Be okay with this. If you keep doing what you need to be doing, your money life will get better and better. Eventually it will take astounding leaps and bounds. This is the magic of compound growth.

Healthy If you don’t take care of your body, someday it won’t take care of you. Don’t be rich and dead. ‘Nuff said!

Believe:

Believe that your financial independence and security is more important than the house you live in, the car you drive, or the clothing you wear. Live life your way. Don’t go the way of the Joneses’.

Believe in, appreciate, and honor your interests and abilities. Do so and you will be driven by a passionate energy. This passion makes the journey as rewarding as the destination.

Believe that you deserve success and happiness. Replace negative thoughts with positive ones. Visualize the success you seek.

Believe in your ability to learn. Use both sides of your brain and exercise your creativity. Allow your curiosity to lead you as a lifelong learner.

Believe in yourself. Believe in you, even when others don’t.

Believe in solutions, not excuses. If you want it bad enough, you can find a way to make it happen. Focus on the things you can do, not on the things you can’t. Seek solutions to your problems and you will find them.

Do:

Create and implement a financial plan, compare your progress to this plan, and modify your plan as needed. There will be obstacles. Go around them. Keep your eye on the map, but remain flexible so you can take detours when needed.

Control your income by being the boss of you. Choosing your occupation is important. The majority of millionaires are entrepreneurs for a reason. Working for oneself means no limits on income.

Live below your means. Duh, right? But you need to DO it. Swap short-term, short-lived gratification for long-term benefits and a financial security.

Harness the power of compounding. Save a portion of income and allow ample time for compounding to perform it’s magic. Time is one of our most valuable assets so start right now. Yes, I mean today!

Take financial risks given the right return. Make well-considered investments and allocate your money in ways that are conducive to building sustainable wealth.

Push yourself past your comfort zone. Do you want a better job? Better pay? Your family to cooperate with the family budget? Have you asked for what you want? If not, what are you waiting for? Get in the habit of stretching your comfort zone. Start by asking for what you want.

Ask questions and keep an open mind so you can continue to grow. Read, find a mentor, arrange for an unpaid apprenticeship, seek advice from those who you see as successful. There is much to learn from the experience of others.

Don’t give up. We all fall off the wagon now and again. The key is to get right back on track. @FrugalDad tweeted this morning: “I love the first day of the month. It’s like having a giant Etch-A-Sketch. Shake your budget around & wipe the slate clean!”

I often scan the business and finance section at our bookstore for new book covers. Virtually every week, I find new titles. Row upon row of money books. How many ways can money be discussed? Which one holds the key to wealth and financial freedom? More importantly:

If the answer to wealth is revealed between the covers of the books proliferating in bookstores, why aren’t more people wealthy?

Take my mom, for instance. Despite her intelligence, upper-grad college education and vibrant energy, she struggled financially her entire life. She passed away a few years ago, penniless.

My mom was an avid reader. My inheritance consisted of boxes filled with books — including a large assortment on the topic of personal finance. If the cure to her financial woes was sitting on her bookshelf, why didn’t her money life thrive?

I am convinced that achieving wealth and financial freedom takes more than understanding how to make, save and invest money. Becoming wealthy is the product of factors more fundamental — and complex — than math.

I really didn’t do anything extraordinary to become a millionaire. No grand inventions, no Fortune 500 company, no big paychecks. I applied basic money principles and they worked. I ask myself, why did I apply these principles, but not my mom? What does it take? Why have I achieved financial freedom while others have not?

While I do have a few explanatory thoughts, I struggle to answer this question succinctly.

I’ve been told more than a few times that I appear to think differently than the crowd. Is the key to my personal and financial success in these five words?

When I was 30, I told my husband, friends and family that I wanted to be financially free by forty.

How do you know if you are saving enough so you can afford to retire? And more importantly, are you saving enough to retire with confidence so that you can support your present lifestyle without running out of money early?

To answer these questions, you might consider using one of the many online retirement calculators available. Unfortunately, these “simple” retirement calculators are often complicated and require you to assume many things about your future retirement that may or may not work out to be true. It’s the old “garbage in equals garbage out” rule, and nowhere is that rule more true than with retirement calculations.

One alternative to sophisticated retirement calculators is to apply simple rules-of-thumb that allow you to quickly and easily estimate the sufficiency of your nest egg and savings plans. While these simple formulas lack the “rocket science” sophistication of Monte Carlo theory and other financial planning innovations, they do provide a reasonable ballpark approximation that is easy enough to do yourself – without a computer, software, calculator or financial planner. Usually, a pencil and the back of a cocktail napkin are sufficient.

The advantage of this simplicity is you will actually complete the exercise – which is essential to successful retirement planning. You must know the retirement savings goal you are aiming for in order to plan constructive actions to reach the goal. You are far better served by knowing a rough approximation of your retirement planning needs than to have no estimate at all.

The truth is perfection in retirement planning is impossible anyway because accuracy depends on assumptions about your future which can never be made with certainty. Therefore, it’s better to at least work with ballpark estimates than to risk being thwarted by complication that might keep you from playing the game altogether.

Below are four simple rules-of-thumb for retirement planning that will at least get you in the ballpark until you have the time and inclination to sharpen your pencil…

The Ten Percent Rule

Some old-wives-tales are true, and the importance of saving 10% of your income happens to be one of these truths. This retirement savings strategy was popularized in the bestselling book The Richest Man in Babylon. In general terms, the way the math works is if you save 10% and invest it with long term returns around 10%, your investment portfolio will grow to the point that it can support your lifestyle from earnings in roughly 35-40 years. That means you could retire and live on the investment earnings alone, never touching the principal. Your life expectancy doesn’t even matter in this situation because you would never run out of money since it doesn’t require you to spend principal. The biggest risk to this simple formula is inflation, although even with that limitation it still provides a good working approximation for how much you should be saving.

What’s fun about this formula is how easy it is to understand, easy to implement, and easily adapted to your situation. For example, if you have less than 40 years until retirement then you should obviously be saving significantly more than 10%. The sooner you start saving, the longer you have for your interest to compound to build your retirement fund. If your average investment return exceeds 10%, you won’t need to save as much. If it is less than 10%, you need to save more.

One big benefit to using this simple rule-of-thumb is you don’t need to pay for a fancy financial plan that sits in the binder on your shelf collecting dust to get started. It is a rough approximation that points a clear direction so you can get started immediately – and starting immediately is a critical factor to your retirement savings success.

The “Millionaire Next Door”

Now that we have a reasonable approximation for how much you should be saving each month, lets examine a different approach that provides an approximation for how successful your savings efforts have been to date.

According to The Millionaire Next Door, authors Stanley and Danko provide a simple yet reasonably accurate formula for assessing your wealth accumulation skills:

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

For example, if you are 35 years old and earn $100,000 per year with no inheritances, then your net worth should be $350,000: 35 times 100,000 divided by 10 equals 350,000. If you meet this standard, consider yourself to be “on track” for moderate wealth accumulation and a successful retirement fund. You aren’t a super achiever, but you aren’t behind either.

Go ahead and do the math for yourself. How do you measure up? This formula is really just another twist on the 10% savings rule cited earlier. It is based on sound mathematics and seems to provide a conservative but realistic figure for a broad range of scenarios.

Although it does not consider inflation, taxes and varying interest rates, this simple formula does yield a useful estimate of your retirement savings goal. It gives you a fast and easy way to see how well you are progressing toward financial freedom.

Stanley and Danko go one step further, creating two additional benchmarks based on their basic formula. “Prodigious accumulators of wealth,” or PAWs, have accumulated twice the savings indicated by the formula. “Under-accumulators of wealth,” or UAWs, have accumulated half the expected total. If you are a PAW then you are reasonably on track to knowing if you can afford to retire. If you are a UAW, now is the time to step up your financial management skills and start saving more.

12 Times Income

Jonathan Clements, former columnist for theWall Street Journal and author of The Little Book of Main Street Money: 21 Simple Truths that Help Real People Make Real Money, offered another alternative to the “How Much Money Do I Need To Retire?” question by claiming a reasonable retirement nest egg should be 12 times your income. To reach this goal, the amount you need to set aside each month depends on how much time you have before your target retirement age and your current savings-to-income ratio. This premise makes a few assumptions:

your income increases to match inflation,

you draw 5% of your savings as income the first few years of retirement, and

you achieve an investment return of 5% after inflation.

The numbers purport to yield 60% of your pre-retirement income. Combined with Social Security and other income, you might end up with 80%, a figure that most retirement calculators assume is enough. Alternatively, if your own calculations show that you need a higher percentage, then you need to amass more than 12 times your income.

Rule of 25

One of my favorite rules for simplifying how much is enough to retire is to multiply your expected annual spending for your first year of retirement by 25 to determine your total savings required. This is just a mathematical simplification of the famous 4% rule where you are allowed to spend 4% of your savings each year during retirement.

This rule is on firm empirical grounds because the sophisticated retirement planning models including Monte Carlo optimizations will generally result in spending rules ranging from 3-5% depending on assumptions and confidence interval required. Now you can get roughly the same result without a computer, software or arcane mathematics. Just take your first year of retirement spending, multiple it by 25, and presto – you are right in the same ballpark.

Summary

These quick and dirty rules of thumb are far from perfect. But the ugly truth about retirement planning is there is no such thing as perfect. In the end it is all a rough approximation anyway. For those readers wanting more explanation and detail, the ebook “How Much Is Enough To Retire” will help you understand exactly when you can afford to retire.

The future is unpredictable and conventional retirement planning requires you to predict the future in order to apply their models – this is a serious flaw. The truth is many unknowable factors will determine your financial needs during retirement, and those will only be known in the fullness of time. There are alternative models to retirement planning that don’t require you to see into the future and for those readers who don’t have the time or inclination to learn those models, this article provides some simple rules that will get you close enough for basic planning.

The important thing is to develop a concrete retirement savings goal to work toward – regardless of the model used. An inaccurate goal is better than no goal at all. You can use these simple rules of thumb to get started today and sharpen your pencil later when accuracy becomes more important.

About the Author

Todd R. Tresidder is a financial coach who retired comfortably when he was just 35 years young. His ebook, How Much is Enough to Retire? is based on his own experiences and explains how you, too, can afford to retire. Check out his web site for more retirement planning books, educational articles, and try his free retirement income calculators.

Women need more money than men. Why? No, not so we can buy more shoes, handbags and manicures. We need more money because we live longer than men, make significantly less salary than our male peers, and are more likely to be single parents raising a family on one income.

Having a child is now the single best indicator of financial collapse.

Women comprise 87% of the impoverished elderly. A woman who works full-time for 40 years will earn $523,000 less than her male counterpart. At age 65, that extra half a million dollars could keep her from becoming one of the elderly poor.

What do these grim statistics tell us? They tell us that women, especially as they become older, are not prepared to take care of themselves financially. Yet nearly 90% of all women will end up managing their finances alone at some point in their lives.

Despite a woman’s greater potential for financial need, it appears that many factors hamper financial equality between the sexes.

What can women do to beat these alarming odds?

Here are a few of my own – perhaps unique – ideas:

Delay motherhood. Or, if it suits you, don’t have children at all. My husband and I purposely waited until we had achieved financial freedom before adopting our daughter because we didn’t want to repeat our own parent’s experiences. We both grew up with work-all-the-time, struggling young parents and quite frankly, that often stunk. We didn’t want money to interfere with our parenting.

Forming a family through adoption rather than pregnancy was a decision I made when I was a mere teenager. The way I figured it, why “make my own” child when there are countless orphans dying for a family already? Since my husband and I chose to create our family through adoption, my biological time clock wasn’t a ticking time bomb.

One’s forties are the usual peak earning and saving years. By switching the typical order of things, my husband and I experienced our peak financial years ten years earlier than most. This allowed us to put the power of compounding interest and growth to work early. Consequently, we don’t need to earn or save as much money over the course of our life because time is on our side.

Today, financially free, our family hasn’t set an alarm clock in years. Whether it be work, parenting or play, we wake with the sun, eager to spend each new day doing whatever we choose. We waited until we could afford to commit to parenting 100%, together. For our family, the wait has been worth it.

I realize the path we chose isn’t a good fit for many but I do think it’s sensible for parenthood to wait until certain things are in order. Consider taking the time to first:

Share parenting and careers with your child’s father. I have two biases to confess right off the bat: One, I think most kids grow up best when raised by their parents (as opposed to day-care providers); and two, women need to know how to make money (see the statistics referenced in this article, above).

My ideal parenting-career model looks like this: Mom and Dad divide childcare and career hours between the two of them. Rather than settle for the stereotypical full-time working father and the stay-at-home mom, each parent works part-time (20-25 hours each), during different shifts, while swapping care of the kids.

Consider the benefits of this arrangement:

Kids grow up spending quality time with both parents

Both Mom and Dad get to spend quality time with the kids

Both parents have the opportunity to pursue their own career paths

No childcare expenses are required

Mom hasn’t given up her earning power

I recognize this isn’t an easy arrangement for everyone. Many families feel they both need to work full-time to support their family. Some don’t think their employer would allow them to work part-time. Others are single-parents who can’t count on reliable child-support or parental care from the other. It’s not the perfect solution for everyone. But if it sounds like an appealing idea to you, see if you can eliminate the “yes-but’s” and figure out a way to make it happen anyway.

Refuse to be underpaid. Remember– a woman who works full-time for 40 years will earn $523,000 less than her male counterpart. When you perform the same work, why in the world should you settle for less pay? Demand what you deserve.

Become financially literate. Almost 90% of all women will end up managing their finances alone so it’s foolhardy to allow the man in your life to handle your finances. Read books, take classes, find a money mentor.

Come to grips with the emotions behind money. The “How To’s” of personal finance are the same for women as they are for men. What is different is our feelings and beliefs about money. It has been demonstrated that most women are raised to nurture and seek acceptance and view money as a means to create a lifestyle. Women spend on things that enhance day-to-day living. Conversely, most men grow up learning to fix and provide. They view money as a means to capture and accumulate value, like a house and retirement. Men don’t spend, they invest. Men don’t want something, they need it. Theirs tends to be a future-money orientation.

Modify your money mindset to a more functional one.

Create a lifetime financial plan. I use Microsoft Money’s lifetime financial planning tool. (Too bad this useful software program has been recently discontinued! Anyone know of a replacement that includes a lifetime planner?)

If you are married or in a committed relationship, invest in it. Money ranks as the first most argued topic for many couples. It has been estimated that an astounding 80% of divorces are the result of money disagreements. A good marriage takes effort. I’ve been married for 22 years, so believe me, I know. We schedule regular date nights (sans kid) and see a counselor for “maintenance tune-ups”. Money and time well invested, I assure you.

Push for national change in Congress, state legislature, public schools and at the corporate level. Support systems that will help to ease financial differences between genders.

Readers, how do you think women can beat the odds? Please add your ideas in the comments section.

Aim, Ready, Fire!

This is a lengthy post (2500+ words) as it contains nearly everything I know about how to be your own boss, in an abbreviated 3-phase format. If you’ve ever dreamed of making money doing something you love to do, I think you’ll find it well worth your time to read. First, a little about me and my entrepreneurial background to provide context for this filled-to-the-brim resource…

I’ve bootstrapped half a dozen small businesses including a couple of dog training schools, home and pet care services, a construction company and most recently, a coaching business. I started each business with less than $1,500 in capital investment. Because I hate alarm clocks, rigid working hours and panty hose, I choose to operate businesses that honor my personal preferences. I wake when I am rested, eager to do what I want to do, when I want to do it. More often than not, I work from home in my pajamas.

My entrepreneurial success didn’t require a diploma. Impatient with seemingly pointless prerequisites and eager to start making my own money, I dropped out of college. I now consider myself a lifelong learner and return to school whenever I want to learn a specific new skill.

Unfortunately, I was a drop out with no vision for my future. I began my adult working life as a graveyard shift donut and coffee waitress. Fortunately, I realized that I was too good to settle for minimum wage. I quit pushing donuts and took a job that would allow me to explore my interests. Because I’d always loved animals, I applied for a job with a veterinary hospital and during this same time, I also negotiated an unpaid apprenticeship with a professional dog trainer to learn marketable new skills.

Don’t tell me what to do! I am the boss of me. As an employee, I resisted standard operating procedures — particularly when I could see a more effective process for said procedures. Recognizing that I found it difficult to do business someone else’s way, I took what I learned as an employee and apprentice and moonlighted with my own business. Once my own business income matched my employment income, I quit my job. I’ve been self-employed since my early twenties.

How much is enough? Unlike the typical American, I have resisted the temptation to inflate my lifestyle to match my income. Rather than make more and spend more to keep up with the Joneses, I enjoy a lifestyle of voluntary simplicity. I value my time, hobbies, recreation and personal relationships more than I do money. Therefore, my moneymaking ambition has always been to make just a little more than enough. Because I pay myself first, I am 100% debt-free and have accumulated over a million dollars. I can afford the luxury of free time. Here’s a wonderful story, written by an unknown author, that aptly illustrates the concept of ‘enough’:

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, “Only a little while.”

The American then asked him why didn’t he stay out longer and catch more fish. The Mexican replied that he had enough to support his family’s immediate needs. The American then asked, “But what do you do with the rest of your time?”

The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life, senor.”

The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats; eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.”

The Mexican fisherman asked, “But, how long will this all take?”

To which the American replied, “15 – 20 years.”

“But what then?” asked the Mexican.

The American laughed and said, “That’s the best part. When the time is right you would sell your company stock to the public and become very rich; you would make millions!”

“Millions – then what, senor?”

The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

Author Unknown

What drives YOU to want to be your own boss?

Aim… (Step One: Zero In On The Right Business)

What do you love to do? Do you make money doing this? If not, why not? What are your unique talents? What are your personal priorities and values? Your quirks? Your passion will be evident to your customers and will prove value. Put aside all judgement as you brainstorm ideas. Need inspiration? Try these exercises:

Don’t try to wear all the hats. Reports on business failures cite poor management as the number one reason for failure. New business owners frequently lack business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Build your team of players and seek help from a bookkeeper, CPA, attorney, manager, sales and marketing specialist, etc. Weigh the advantages of hiring subcontractors versus employees.

Participate in networking, professional and business support groups.

Limit your exposure to toxic people. Don’t allow negativity to bring you down. Surround yourself with those who are happy and successful.

Be mindful of your own internal dialog. Eliminate the words ‘but’, ‘try’, and ‘can’t’ from your personal vocabulary.

Get your dollars in a row:

Starting a business is risky. As a rule of thumb, new businesses have a 50/50 chance of surviving for five years or more (source: Small Business Association). Don’t let statistics discourage you; just be properly prepared for success.

Plan for the best AND have an exit plan in place.

Start with sufficient capital and operating expenses. Establish an emergency savings account equal to at least one year of operating and living expenses.

If money is tight, moonlight. Keep your day job and work your business between working hours. Cut back on your employed hours incrementally. Once your part-time business is earning enough money to replace your day job, quit.

Establish yourself as an authority in your niche:

Volunteer

Blog

Write a book

Teach

Speak

Eliminate the need for costly advertising expenses. I’ve never spent a dime on advertising. Referrals and word of mouth come free.

Prevent burnout. Assuming you plan to be your own boss for the long haul, it is imperative to keep your work and personal lives balanced:

Take time off to play.

Get adequate sleep.

Hug your family.

Be there for your friends.

Eat your vegetables.

Express your gratitude. Psychologists say that establishing a habit of gratitude plays a significant role in a person’s sense of well-being:

“The study required several hundred people in three different groups to keep daily diaries. The first group kept a diary of the events that occurred during the day, while the second group recorded their unpleasant experiences. The last group made a daily list of things for which they were grateful.

The results of the study indicated that daily gratitude exercises resulted in higher reported levels of alertness, enthusiasm, determination, optimism and energy. Additionally, the gratitude group experienced less depression and stress, was more likely to help others, exercised more regularly and made more progress toward personal goals. According to the findings, people who feel grateful are also more likely to feel loved. McCollough and Emmons also noted that gratitude encouraged a positive cycle of reciprocal kindness among people since one act of gratitude encourages another.” (source)

“although money doesn’t buy happiness, happiness can buy money. Young people who describe themselves as happy typically earn higher incomes, years later, than those who said they were unhappy. It seems that a sense of well-being can make you more productive and more likely to show initiative and other traits that lead to a higher income.”

Measure and evaluate your progress. Regular evaluations using analytical measures are important for keeping on track and staying in alignment with your vision. Identify what works, what doesn’t and what you want to accomplish next:

Keep a journal.

Maintain an accurate bookkeeping system and chart your financial progress.

Track the ratio of repeat customers versus new ones.

Ask for feedback from your customers, employees and referral sources.

Stay connected. Nurture professional relationships with people who have the potential to help you with contacts, information, referrals and advice. In turn, be authentic and mindful of how you can add value to their lives. Your professional community is a rewarding place to practice good karma.

Send a periodic email that reads, “I’ve been thinking about you. We haven’t talked in a while — I’d love to meet up for coffee or tea sometime next week to catch up.”

Consider expansion carefully. Remember your priorities and do the math. For example, my husband and I considered expanding our small construction business to include a staff of workers. Here are the two options we considered:

That’s right — both options provide $125,000 in annual net profit. Now that we’ve completed the math, which would you choose?

Option A comes with less expenditures of time, energy and capital.
Option A reduces risk.
Option A requires very little initial capital investment.
Option A allows us to work from home.
Option A puts the same amount of dollars in our pocket as Option B.

We chose Option A. Every business is different, of course, so run your own numbers.

Pay yourself first and invest for a lifetime of freedom:

Be a tightwad. Thomas Stanley, coauthor of the bestseller, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, found that the prototypical millionaire told him, “I am my favorite charity.”

As your profits grow, be watchful of lifestyle inflation.

As a rule of thumb, put at least 15% of your net profits into a diversified retirement account.

Once you achieve financial independence, give back and help other get started:

Note: All told, this post took me more than 8 hours to put together (and over twenty years to learn!). If you found it useful, please share it with your friends, bookmark it, Stumble it, Tweet it, link to it from your blog, etc. For your convenience, there is a “Share This Post” link in the footer of this post. Thanks!

Follow me on Twitter (@MillionMommyND) where I share interesting articles, opinions, quotes, tips and other bite-sized tidbits relevant to success, happiness and financial freedom almost daily.

Sally wants Mark to work more so she can quit her job to be a stay-at-home mom for their two young children. Mark wants Sally to continue working so they can pay down debt and build some savings. Despite earning a higher than average combined annual income, they often argue about money. Worse, they feel stuck, unable to do anything about their current financial situation.

This typical family lives in a four bedroom suburban home. Kids’ toys multiply like horny rabbits, spilling into the gigantic playroom. Two newer cars and a pickup truck occupy the three-car garage. The RV attempts camouflage behind a tall privacy fence that surrounds the expansive green lawn.

The children’s toys gather dust all week long because the kids are away at daycare, 50 hours a week, while Sally and Mark work. The big toys gather dust, too — the RV rarely leaves the yard because once the weekend arrives, the family feels too wiped out to go anywhere. At least the big screen HDTV LCD surround sound system sees some love while everyone veges out…

Mom and Dad tell me their number one priority is spending quality time with their two young children. But the children spend the majority of their awake hours with daycare providers because Mom and Dad have to work overtime to pay for and maintain their grand accumulation of Stuff.

Clearly Sally and Mark’s financial obligations are out of whack with their personal priorities.

The truth is they haven’t discovered the difference between their needs and wants. Once they do, they will find it IS possible to enjoy the life they want to live, together, with their children.

How to find the difference between needs and wants:

1. Imagine that you and your family are currently camped out in a homeless shelter, eating at the soup kitchen and receiving government assistance. Now imagine that you landed a job that earns just enough money to pay rent on a small apartment and to buy your own food. Add bus fare for your work commute. Write down your bare bones monthly costs. Here’s an example based on data collected for an average family in the lowest income bracket:

Results: If Sally and Mark reduce their material wants, they could save up to $6,686 a month — $80,232 annually — easily enough to afford one parent the option to quit their job, pull the kids out of daycare and raise them themselves. If their top priority is to spend more time with their children, clearly they can afford to do so.

I’m not advocating that you should get rid of all your wants, nor am I saying that every parent should quit their job to raise their children. That’s not what this post is about. I simply find it important to uncover the role needs and wants play in our financial life. My intention is that you realize your life is full of choices. Once you decide what is truly important to you and make a conscious choice, reaching your goal is simply a matter of putting your money where your mouth is.

BONUS! I’ve created a very unique tool that calculates the difference between your needs and wants. It also uses dollars, the value of your time, AND your personal values and priorities as currency! This is the spreadsheet I use to create my own spending plan (aka budget). You can click here to download the Excel (.xls) file I created directly to your computer for immediate use. This spreadsheet works on my Mac in Numbers, too. You are welcome to share this spending plan tool with your friends or post it to your own blog.

I have a favor to ask: This post and the spreadsheet I designed took me considerable time to put together. If you like them, please share this post and/or spreadsheet with your friends, Digg, Twitter, Stumble Upon, Facebook, and other social media applications. Thanks!